Fixing Health Care Waste Would Trip Deficit

In Washington, lawmakers are trying to work out a deal to keep the economy from going over the fiscal cliff. Many economists predict those automatic tax hikes combined with deep spending cuts set to go into effect on New Year's Day would throw the economy back into recession.

A group of top CEOs has been urging lawmakers to reach a deal to keep that from happening. Mark Bertolini is one of them. He's CEO of the health insurer Aetna and he said tax increases are as important as spending cuts. We called him to talk more.

Good morning.

MARK BERTOLINI: Good morning.

MONTAGNE: So let's begin with something you have made public recently. And that's that Aetna is preparing for layoffs if the government does go over this fiscal cliff. Is that your way of sounding the alarm to both sides of Congress?

BERTOLINI: Well, you know, I think that connotation to my words is overblown. What I did say is that when companies go into a recession, one of the consequences of that recession are layoffs. And to the degree we go into a deep recession as a result of going over the fiscal cliff, that is an option that we would be prepared to exercise, as well as many other employers.

MONTAGNE: I'm interested in knowing where you see talks going.

BERTOLINI: Well, I think the talks are hopeful right now. I've been, you know, involved in a meeting that we had at the White House last week. But I've also have been very involved with the Fix the Debt Campaign for the last couple of years, and we do have a bipartisan approach. And that balanced approach is both taxes and entitlement reform.

MONTAGNE: Would you consider yourself an outlier among CEOs, that tax increases is not just inevitable but a good thing?

BERTOLINI: No, I think I'm actually in a majority of people in my socio-economic class and in my position. I would tell you that as long as we work on working down the debt, and the cost of working down the debt is really to pay more taxes, I get that. That's important. That invests for the future.

Think of it like war bonds. You know, we're paying for the future when we're helping the country get through a difficult time.

Let's turn now to the fundamental issue, the ballooning government debt. One of the main causes is rising health care costs. It would be something you know quite a bit about. What do you see as key ways to lower health care?

BERTOLINI: I think the fact that we waste $750 billion a year on the health care system, about 30 percent of what we spend. So if we just fix the waste in the health care system, over 10 years that would pay back half of the nation's deficit. So, for example, today there is no data connection about Mark Bertolini across multiple providers, and if I'm having a significant health event, I see one doctor now and then I see another doctor in a few weeks from now - they may order the same tests.

Why shouldn't that information be widely available on the tests that I've had done? Why shouldn't there be a profile on recent exams that I've had? Why shouldn't that information be available in some way? And if it's available, then physicians begin with a better base of information and can move forward versus having to reinvent the history.

MONTAGNE: Let me ask you about fixing the delivery system so that costs and payments are based on outcomes, not procedures done.

BERTOLINI: I think that is a very important step. In today's system we pay for each unit of service provided and there is an incentive then to do more units of service, particularly when the government cuts back on the reimbursement for units of service. Medicare and Medicaid pay well below physician's costs for reimbursement. So to the degree we change the system to where we pay for better outcomes, improving their health, then I think the system changes its focus.

MONTAGNE: But if you somehow manage to get a system where it's based on better outcomes, wouldn't many doctors, given a choice, choose patients that are healthier so that they offer that physician an opportunity at achieving a better outcome?

BERTOLINI: I would argue that people with multiple chronic diseases in the Medicare population, the opportunity to improve their care and make headway is much more dramatic than dealing with a healthy person. What we need to do is set up a system where we're reimbursing based on the underlying illness of the individual. So in the Medicare population the premium is $1,200 a month. In the healthy population it's $300 a month.

If we can improve care by 10 percent in the elderly population, that's $120 a month of opportunity versus $30 a month in the commercial population. So I think those are dramatic impacts, and we've seen 10 percent of the Medicare fee for service population driving 50 percent of the health care costs in Medicare, which is 50 percent of the nation's health care costs. And if we can have an impact there, we can make much better progress.

MONTAGNE: Could you give us an example?

BERTOLINI: I'll give you a great example. Congestive heart failure patients are the most expensive patients to take care of. We have given them a scale with Bluetooth technology and we told them to go home, stand on the scale in the morning and take your medication. And we monitor their weight over time. If their weight goes out of tolerance, because that means they're putting on water weight, which causes the congestive heart failure, then what we do is we send a nurse to the house.

The nurse makes sure their taking their medications. If they're taking their medications, they call the doctor to update them because they're not working as well as they should, and before they leave, they roll up the loose rugs in the house 'cause people shuffle when they walk when they've got water weight. We've reduced congestive heart failure readmissions by 43 percent. That's huge.

MONTAGNE: Roll up the rugs because people shuffle, so have also eliminated some percentage of falls?

BERTOLINI: That's right, 'cause they break their hips. And so there are example after example after example of having an impact there. You know, congestive heart failure admission can cost $80,000. And so if we can avoid one, we've not only improved the patient's quality of life dramatically, because they're still at home, but they're not in a hospital where they could get sicker, which is often what happens.

MONTAGNE: But of course would you have been saying this, or some of your colleagues in related industries, even 10 years ago?

BERTOLINI: No. And I think, you know, as time goes on, as we see the impact on health care, not only on this country's deficit, but on nations around the world, health care is central to the economic vibrancy around the globe. So I think we've come to the realization that this is very, very important. How do we do it better? Because it's unsustainable on its current path.

MONTAGNE: Mark Bertolini is the CEO of Aetna. Thanks very much for joining us.